From...

December 27, 1999
Web posted at: 9:41 a.m. EST (1441 GMT)

by Stan Miastkowski

(IDG) -- Most roller coasters don't have as many ups and downs as memory prices--if one did, it might be the scariest ride on the planet. But as the end of the year approaches, memory prices seem headed in one direction: down.

This trend is good news for PC makers and consumers looking to boost their computing power by beefing up their RAM.

Memory maker Kingston Technology fired the first shot in the latest price war by cutting prices on most of its memory modules this week. Kingston, which Dataquest memory analyst Jim Handy calls the "leader in the RAM market," reduced prices on modules for name-brand systems and printers from 20 to 23 percent, while prices on some generic PC-100 SDRAM modules dropped as much as 51 percent.

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Memory prices are falling now because in early autumn prices were high and demand increased, leading chip manufacturers to ramp up production, says Lisa Dreher, Kingston's memory product manager. In the volatile memory market, the increased supply caused prices to start dropping. And now purchasers will reap the benefits at retail.

Although Kingston doesn't sell directly to the public, Dreher says the price cuts will be felt in the retail market. After the recent reductions, the typical retail price for a Kingston 64MB PC-100 RAM module is about $95, and $125 for a 128MB module.

Dataquest's Handy says Kingston's pricing on 128MB modules is "unusually aggressive" and theorizes that the company is making a serious attempt to further build volume in one of the most popular segments of the memory market.

Competition Surprised

Can you expect similar price cuts from competitors? Scott Schoenherr, general manager of archrival Crucial Technology, a division of Micron, seemed surprised by Kingston's move. "No kidding," he says in response to the news.

Crucial sells memory directly to consumers by phone or through its Web site. (Online buyers get a 10 percent discount.) Schoenherr claims that Crucial's prices are "about half of Kingston's," but he quotes current prices for a 64MB SDRAM module at $94, a dollar less than Kingston's price, and 128MB SDRAM modules at $186, $61 more than Kingston's.

Dataquest's Handy expects prices to "further soften" through the first quarter of 2000, down to about 90 cents per megabyte.

For the longer term, Handy says a capacity crunch will hit the memory market in late 2000, causing prices to stabilize through 2002. And for the really long term, Handy says memory prices will "drop like a rock" in 2003.